James Halstead (AIM:JHD), the AIM-listed manufacturer and international distributor of floor coverings, warned that annual profit will land approximately 10-15% below last year's level.
The trading update, covering the year ended 30 June, said sales are expected to be marginally below the 2025 comparative, with the shortfall driven largely by the company's decision to absorb rising input costs rather than pass them fully to contractors.
The cost pressure stemmed from the Iran conflict, which prompted many suppliers to impose immediate surcharges.
"We felt this was a situation to absorb some of this cost and to buffer the effects to the end contractors, at least for the short term", the company said, adding that its stock levels let it capture extra volume as less well-placed competitors raised prices.
Demand for resilient sheet flooring held up, but luxury vinyl tile sales weakened, particularly in Europe and Australia, even as James Halstead grew UK market share.
UK sales, the company's largest market, rose modestly year-on-year, with a strong June partly reflecting purchases made ahead of July price increases.
Europe, notably France and the Netherlands, stayed "solid but muted", while the Middle East ran some 54% ahead of comparatives and South Africa 25% ahead.
The balance sheet remains ungeared, underpinned by cash generation and reserves.
Full-year results are due towards the end of September.
News Intelligence what this means for the company
James Halstead flagged a 10–15% profit decline for the year ended 30 June, driven by its decision to absorb supplier surcharges (triggered by the Iran conflict) rather than pass them to contractors. Sales are marginally below prior year despite UK market share gains, as the company prioritized volume capture and customer retention over margin protection—a deliberate trade that signals near-term earnings pressure outweighs growth momentum.
The profit warning reflects a strategic choice to shield customers from cost inflation, which preserved UK market position but compressed margins materially. The ungeared balance sheet and cash generation provide a buffer, but the 10–15% earnings decline and soft LVT demand in Europe and Australia indicate the company is absorbing headwinds rather than passing them through—a posture that works only if input costs stabilize and demand recovers.
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